Estate planning: death soon after divorce.

• Author: Kirkwood, Peter T.
• Position: Florida

During the throes of an extended divorce proceeding, it is oftentimes instinctive for clients to seek a review and revision of their will or other estate planning documents during the pendency of the proceedings. Although such a review is prudent, the predominance of joint assets, retirement accounts, and life insurance policies owned by most married couples limits the effectiveness of revisions to a will during the divorce.

Less instinctive to clients is whether a review and revision to their estate planning documents is necessary immediately following the divorce. It is a common occurrence for estate planning attorneys to receive frantic calls from clients the day before or after their divorce is finalized seeking the immediate removal of their ex-spouse from their estate planning documents. In actuality, Florida law has generally protected a divorced decedent from unintended consequences at death regarding his or her ex-spouse as to the disposition of separately owned assets that are controlled by the terms of a will or revocable trust agreement executed prior to the entry of the final judgment of dissolution of marriage. As a corollary to the protection provided to wills and revocable trusts, Florida law also protects a divorced spouse in the context of certain nondispositive estate planning documents, including advanced directives, health care powers, and powers of attorney.

Until recently, Florida statutes did not address the significant class of assets that are disposed of outside the context of a will or revocable trust. Those assets include beneficiary designated assets, such as life insurance, annuities, and retirement plans (individual retirement accounts, profit-sharing plans, 401(k) accounts, nonqualified deferred compensation rights, and other similar assets). The divorce decree or property settlement agreement typically addresses post-divorce ownership of beneficiary-designated assets. An untimely death prior to revising the account ownership or beneficiary forms generally resulted in the surviving ex-spouse inheriting this type of asset. In 2012, Florida enacted F.S. [section]732.703 to address this class of "beneficiary form designated" asset, and attempts to avoid the unintended disposition of such assets to a divorced spouse.

This article provides an overview of Florida law on the effect of divorce on estate planning, including the protections automatically provided by a patchwork of historical statutes and the 2012 statute. It also covers the topic of irrevocable trusts that are generally not covered by Florida statutory law. Irrevocable trusts should be addressed during the divorce.

Wills and Revocable Trusts

Florida law has long provided protection to a divorced decedent when it comes to dispositions made to an ex-spouse in the decedent's will and revocable trusts. (1) As to wills, F.S. [section]732.507(2) provides that any provision of a will executed by a married person that affects the spouse is void upon divorce. (2) It follows that, upon divorce, a will shall be administered and construed as if the former spouse had died at the time of the divorce, unless the will or divorce judgment expressly provides otherwise. (3)

F.S. [section]736.1105 has the same effect on revocable trusts as the statute governing wills. It provides that any provision of a revocable trust (which is executed by a husband or wife prior to divorce) that affects the settlor's spouse becomes void upon divorce. Unless the revocable trust expressly provides otherwise, the trust shall then be administered and construed as if the settlor's spouse died on the date of the divorce. (4)

Thus, there is no immediate need to revise a client's will and revocable trust upon entry of the final judgment of dissolution of marriage. The above-cited statutes also have the same effect on fiduciary positions, such as personal representative and trustee. Of course, if circumstances change, such as remarriage, then revisions to the will and revocable trusts become necessary if the client wishes to provide for his or her new spouse in their estate planning documents. (5)

Health Care Documents and Power of Attorney

Another category addressed by Florida law upon divorce is in the area of health care and powers of attorney. If a husband or wife names his or her spouse as their health care surrogate or as the agent under their advance directive (living will), a subsequent divorce automatically revokes the designation, unless otherwise provided for in the advance directive/health care surrogate form, or final judgment of dissolution. (6)

The law governing powers of attorney is slightly different than the advance directive/health care surrogate statute in that a power of attorney vested in a spouse terminates upon the mere filing of a divorce action or upon filing for legal separation (rather than upon the entry of a final judgment of dissolution of marriage). (7) Because of this distinction, if the divorce never becomes final and the action is withdrawn, it is not clear how Florida law would treat the original power of attorney executed before the petition for dissolution was filed. Thus, in an abundance of caution, it is in the client's best interest to execute another power of attorney after the action is withdrawn redesignating their spouse as their agent.

Beneficiary-Designated Assets

Until July 1, 2012, beneficiary designations were not automatically changed upon divorce. Section 732.703 expands the automatic elimination of ex-spouses from their existing estate plans by affecting beneficiary designations. It applies to all designations made by or on behalf of decedents dying on or after July 1,2012, regardless of the date of the execution of the designation form. (8)

Prior to 2012, the appellate courts and the Florida Supreme Court addressed beneficiary designations for assets, such as life insurance policies, individual retirement accounts (IRAs), deferred compensation funds, and other beneficiary-designated assets. (9) Thus, prior to the enactment of [section]732.703, absent a marital settlement agreement providing who is to receive the death benefits, or specifying who...